Commodities | May 12 2015
By Greg Peel
After watching the spot uranium price suddenly fall rather precipitously towards the end of April, the uranium market was last week met with the news the US Energy Secretary had decided transfers by the Department of Energy did not have an adverse effect on the industry.
This would have been disappointing for the US enrichment industry in particular, whose legal challenge led to the Secretarial determination. In order to fund the environmental clean-up of the Portsmouth Gaseous Diffusion Plant, the DoE has been selling portions of government inventory into the market at regular intervals. The department has also been down-blending highly enriched uranium into low-enriched uranium for security purposes.
The Energy Secretary determined such activity did not have a materially adverse impact on the US uranium production, conversion or enrichment industries. But having said that, the Secretary did suggest the pace of uranium transfers should be slower in future.
This compromise may have provided some comfort but it otherwise appears the sharp price drop in April, including US$3.00 in the final week, was enough to bring the buyers out from hiding. Seven transactions were concluded in the spot market last week, industry consultant TradeTech reports, totalling 1mlbs of U3O8 equivalent. Prices rose during the week only to consolidate somewhat by week's end when sellers re-emerged.
TradeTech's weekly spot price indicator has risen US50c to US$36.00/lb. Utilities were among the buyers.
Three transactions involving small quantities were reported in the mid-term market last week. TradeTech's term contract price indicators remain unchanged at US$40.25/lb (mid) and US$49.00/lb (long).
Uranium price weakness over 2014 does not seem to have deterred US uranium producers, who produced 4.9mlbs of U3O8 over the year, TradeTech reports, representing a 7% increase on 2013. Where the impact of lower prices was felt, nonetheless, was in exploration spending. It fell to US$11m in 2014, down 50% from 2013.
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